ECO232 --------------------------------------------------------------------------------------------------- Question: Returns to scale of a production function describe how its output responds to ___________ increases in all of its inputs. Answer: Proportional Question: The price ceiling produces the quantity exchanged in the market and creates_____. Answer: Shortages Question: Marginal Revenue Elasticity formula is given as___ Answer: P(1- 1/e) Answer: P(1-1/e) Question: A concept used to quantify the response in one variable when another variable changes is referred to as ___? Answer: Elasticity Question: The quantity that consumers are willing and able to buy at each price is called_____at that price Answer: Quantity demanded Question: The marginal-average relationship states that when a marginal value is above its corresponding average value, the average value will rise. When the marginal is below the average, the average value will _____ Answer: Fall Question: Change in costs, input prices, technology, or prices of related goods and services leads to change in______ Answer: Price Question: The locus of Pareto optimal efficient points in an Edgeworth Box diagram is referred to as ___ Answer: Contract curve Question: A table showing how much of goods firms will sell at different prices is called ___ Answer: Supply Schedule Question: The law of supply states that an increase in market price will lead to an increase in quantity _____ Answer: Supplied Question: The relationship between the quantity of goods supplied and price is said to be ___ Answer: Positive Question: The study of the behaviour of individual decision-making units and of the workings of individual markets, viewed in isolation is known as __________ equilibrium. Answer: Partial Question: A concept used to quantify the response in one variable when another variable changes is referred to as ___? Answer: Elasticity Question: The Marginal Rate of Transformation (MRTyx) can be viewed as the amount of Y that must be given up to obtain a one unit increase in X production. True or False? ____. Answer: True Question: The three conditions in general equilibrium are consistent with ____ optimality in production and consumption. Answer: Pareto Question: ____ economics deals with comparing alternative states of the economy in order to determine which is better and which are worse. Answer: Welfare Question: Costs that changes with a firm’s output level are termed ____ Answer: Variable cost Question: Utility in economics means ____ Answer: Satisfaction Question: A combination of Fixed Cost and Variable Cost gives ___ Answer: Total Cost Question: Q = KaLb is known as a___ production function Answer: Cobb Douglas Question: When Total Product is 0, Marginal Product is = ___ Answer: 0 Question: The concept "Law of demand" was first used by ____  Answer: Alfred Marshall Question: The firm's variable costs are all costs that do change with its level of ____ Answer: Output Question: The returns to scale of a production function describe how its output responds to proportional increases in all of its ___ Answer: Inputs Question: In the short run, a firm has at least one ____ input  Answer: Fixed Question: Along the ___ line lies all input combinations that the firm can buy when itspends every bit of her budget Answer: Isocost Question: ___costs are the costs of using firm-owned resources Answer: Implicit Question: Costs that firms have incurred and cannot be reversed is known as ___ cost Answer: Sunk Question: A statement relating how inputs can be combined to achieve various possible levels of output is known as ___ function. Answer: Production Question: ____ criterion welfare was developed by Professor Tibor Sciotovisky. Answer: Double Question: Pollution of air as a result of firm's production activities is known as a ____ cost Answer: Social Question: A typical total product curve for a variable input first has a range of ___ marginal product Answer: Increasing Question: Mathematically, marginal product of labour is represented as Answer: dQ/dL Answer: ΔQΔL Question: The Marginal Rate of Technical Substitution is the rate at which one input can be substituted for another, while ___ remains constant. Answer: Output Question: Upward-sloping isoquants imply a _____ marginal product of one of the two inputs. Answer: Negative Question: A proportionate change in the quantity demanded of good X due to a proportionate change in the price of good Y is referred to as ___ Answer: Cross Elasticity Question: The theory that revolves around the concepts of demand and supply and the workings of the price system is known as ___. Answer: Microeconomics Question: A measure of the responsiveness of demand to changes in the commodity's own price is referred to as ___ Answer: Price elasticity of demand Question: At the point where Total Product is at maximum, Marginal Product is __ Answer: Zero Question: The Negative relationship between price and quantity demanded is often referred to as the ___ Answer: Law of demand Question: The Law of ___ states that the marginal product of a variable input will eventually fall, if that input is used with one or more fixed input Answer: Law of Diminishing Return Question: The Marginal Rate of Technical Substitution is ___ Answer: The rate at which one input can be substituted for another, while output remains constant Question: Marginal Product of Labour is defined as___ Answer: The rate of change of output with respect to change in labour while the amount of all other inputs remains constant Question: A frontier showing all possible combinations of utility for two consumers when the economy is efficient in both production and consumption is known as ___ Answer: Grand Utility Possibilities Frontier Question: In production, a period of time in which all of the inputs in a firm’s production function can be changed in amount is referred to as ___ Answer: Long run Period Question: A production firm’s cost that changes in proportion with its level of output is referred to as ___ Answer: Variable Cost Question: The term law of demand was first used by economist Marshall in his ___ textbook Answer: 1890 Question: The movement along a supply curve is caused the change in quantity supplied brought by a change in ___. Answer: Technology Question: If the supply curve of a commodity is positively sloped, a rise in the price of the commodity all thing being equal, result in ___ Answer: an increase in the quantity supplied Question: The market demand curve for a commodity is obtained by the _________ summation of all the individuals’ demand curves for the commodity Answer: Horizontal Question: The economic theory of production assumes ____ consumer behavior Answer: Rational Question: The difference between total sales revenue and total cost of production known as ___ Answer: Profit Question: The process in which only part of the market is considered is known as ____. Answer: Partial equilibrium Question: When there is a decrease in income for both farmers and bankers is , the demand for egg may ___ Answer: Fall Question: Isoquants are negatively sloped. Meaning they are ___ Answer: Downward Sloping Question: The ___ curve shows the optimal combinations of utility for two consumers, given the product mix of the economy Answer: Utility possibility Question: A reduction in price will increase total revenue when demand is __ Answer: Inelastic Question: If the economy is to be efficient, it must move from any point on Edge worth box to a point on a ____________ Answer: Contract curve Question: In the long run, we noted in the concept of production theory, all of the inputs of the production function are ___ Answer: Variable Question: ___ is used to calculate elasticity between two points on a demand schedule or curve? Answer: Arc Elasticity Question: The transformation curve is derived from __ Answer: The production contract curve Question: Goods and service for which consumption by some individuals does not reduce the amount available for other is known as __ Answer: Public good Question: The various combinations of utilities of two individuals that give society the same level of satisfaction is called ____. Answer: Social welfare function Question: Given Qd = 45 + 10Px and Qs = - 25 + 15Px, find the value of Px Answer: 14 Question: The combining and organizing of economic resources that transforms them into a different but useful output is referred to as ___ Answer: Production Possibility Frontier Question: Marginal revenue is positive when elasticity is ___ Answer: Greater than 1 Question: In deriving the utility-possibility curve, we make interpersonal comparisons of utility. Answer: Never Question: For a given input price ratio PL/PK, the path of tangency points between isocost line and isoquants is called _________ Answer: Expansion path Question: ___ costs are the costs of using firm-owned resources Answer: Implicit Question: The negative relationship between price and quantity demanded is referred to as ___ Answer: Law of Demand